I'll not be paying you for 120 days

SMALL businesses right across the North-East are absolutely crucial for employment and for growing the economy.

They employ 333,000 staff, paying wages and contributing £24bn to the coffers of the Government - all on time.

So, you would expect that small businesses would get the same in return?

Unfortunately, this isn't the case for far too many small businesses.

Our research has found that 57 per cent of larger businesses are not paying on time.

Further to this, and despite all the Government rhetoric about paying on time, 50 per cent say the NHS hasn't and 36 per cent of Government agencies haven't either.

We all know the treatment that small businesses get from the Government if HMRC doesn't receive National Insurance contributions on time or if they are late paying a tax return.

Imagine the conversation if a small supplier was to tell a large contractor "I'm not going to pay you for 120 days because I don't recognise or respect your standard terms".

Yet this is what far too many large firms say to their supply chain, knowing fine well that small suppliers depend on them for business.

Some of these include those that seek to trumpet their corporate social responsibility at any opportune moment.

Why should paying small businesses on time be any different?

Why do small businesses have to spend inordinate amounts of time chasing up late payment?

Where's the social responsibility in all that?

Getting paid late has a huge impact on small businesses.

The three biggest impacts it has on our members are reduced profitability, restricted business growth and, in turn, being late paying suppliers.

All of which hold back the recovery of the North-East economy.

Research from BACS shows that small businesses spend about £700m alone chasing up late payment.

To put that in context, that is half the total sum of the Government Regional Growth Fund budget.

Imagine how many new staffcould be taken on or how much business investment could be made if small businesses were paid on time.

So what can we do to change this?

Ideally we'd like to see a culture change in late payment where the default setting was to pay on time.

Before we get there we'd like to see the Government give the Prompt Payment Code more teeth to give confidence to small firms to challenge decisions and additionally a named contact for small businesses which face difficulties.

Let's make the North-East an exemplar in paying on time.